Survivor Income Benefit Equalization Plan - Philip Morris Cos. Inc.
PHILIP MORRIS
SURVIVOR INCOME BENEFIT EQUALIZATION PLAN
Effective January 1, 1985
(As amended and in effect as of April 1, 1992)
TABLE OF CONTENTS
Page No.
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PHILIP MORRIS SURVIVOR INCOME BENEFIT
EQUALIZATION PLAN - Preamble......................................... 1
ARTICLE I............................................................ 2
DEFINITIONS...................................................... 2
(a) Committee.............................................. 2
(b) Compensation Limitation................................ 2
(c) Plan................................................... 2
(d) Survivor Income Benefit Equalization Allowance or
Allowance.............................................. 2
(e) Survivor Income Benefit Plan........................... 2
ARTICLE II........................................................... 3
SURVIVOR INCOME BENEFIT EQUALIZATION ALLOWANCES.................. 3
A. Survivor Income Benefit Equalization Allowances and
other benefits payable under this Plan................. 3
B. Commencement and termination of Survivor Income
Benefit Equalization Allowances and other benefits
under the Plan......................................... 3
C. Reduction of Survivor Income Benefit Equalization
Retirement Allowances.................................. 3
ARTICLE III.......................................................... 5
FUNDS FROM WHICH ALLOWANCES ARE PAYABLE.......................... 5
ARTICLE IV........................................................... 6
THE COMMITTEE AND ITS DELEGATEES................................. 6
ARTICLE V............................................................ 7
AMENDMENT AND DISCONTINUANCE OF THE PLAN......................... 7
ARTICLE VI........................................................... 8
CHANGE IN CONTROL PROVISIONS..................................... 8
PHILIP MORRIS
SURVIVOR INCOME BENEFIT EQUALIZATION PLAN
The Philip Morris Survivor Income Benefit Equalization Plan as
hereinafter set forth shall govern the rights of a Plan Beneficiary of a
Deceased, Disabled or Retired Employee whose Plan Beneficiary becomes
eligible for a Survivor Income Benefit Allowance on or after April 1, 1992
and whose benefits under the Philip Morris Survivor Income Benefit Plan are
or will in the future be limited by reason of Section 505 of the Internal
Revenue Code of 1986, as amended from time to time.
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ARTICLE I
DEFINITIONS
The following terms as used herein shall have the meanings set forth
below. All capitalized terms not defined below shall have the same meaning
as in the Survivor Income Benefit Plan.
(a) 'Committee' shall mean the Corporate Employee Benefit Committee of
Philip Morris Companies Inc. charged with the administration of the
Plan as from time to time constituted.
(b) 'Compensation Limitation' shall mean the limitation of Section
505(b)(7) of the Code on the annual compensation of a Deceased,
Disabled or Retired Employee which may be taken into account under
the Survivor Income Benefit Plan.
(c) 'Plan' shall mean the Philip Morris Survivor Income Benefit
Equalization Plan described herein and in any amendments hereto.
(d) 'Survivor Income Benefit Equalization Allowance' or 'Allowance'
shall mean the amount payable under the Plan to a Plan Beneficiary
in equal monthly payments during a twelve (12) month period.
(e) 'Survivor Income Benefit Plan' shall mean the Philip Morris Survivor
Income Benefit Plan, effective February 1, 1974, as amended from
time to time.
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ARTICLE II
SURVIVOR INCOME BENEFIT EQUALIZATION ALLOWANCES
A. Survivor Income Benefit Equalization Allowances and other benefits
payable under this Plan shall be as follows:
(1) The Survivor Income Benefit Equalization Allowance payable to a
Plan Beneficiary who is eligible for a Survivor Income Benefit Allowance
under Article II, A(1)(b) or Article II, B(3) or (4) of the Survivor Income
Benefit Plan, or a benefit payable pursuant to Article II, C of the Survivor
Income Benefit Plan shall equal the amount by which a Survivor Income Benefit
Allowance or benefit payable under Article II,C of the Survivor Income
Benefit Plan, as applicable to the Plan Beneficiary, if computed without
regard to the Compensation Limitation, exceeds the amount of the Survivor
Income Benefit Allowance or benefit under Article II, C of the Survivor
Income Benefit Plan actually payable to the Plan Beneficiary under the
Survivor Income Benefit Plan.
(2) The Survivor Income Benefit Equalization Allowance payable to a
Plan Beneficiary who is eligible for a Survivor Income Benefit Allowance
under Article II, A(2)(b), Article II, A(3)(b) and Article II, A(4)(b) of the
Survivor Income Benefit Plan shall equal the amount by which a Survivor
Income Benefit Allowance payable pursuant to said provisions of Article II,
as applicable to the Plan Beneficiary, if computed without regard to the
Compensation Limitation, exceeds the amount of the Survivor Income Benefit
Allowance actually payable to the Plan Beneficiary under the Survivor Income
Benefit Plan.
B. Commencement and termination of Survivor Income Benefit Equalization
Allowances and other benefits under the Plan:
A Survivor Income Benefit Equalization Allowance or other benefit
payable to a Plan Beneficiary shall commence and terminate simultaneously
with, and be paid in accordance with the terms of the Survivor Income Benefit
Plan. An application for a Survivor Income Benefit Allowance under the
Survivor Income Benefit Plan shall be deemed an application for payment of a
Survivor Income Benefit Equalization Allowance under this Plan.
C. Reduction of Survivor Income Benefit Equalization Retirement Allowances:
(1) A Survivor Income Benefit Equalization Allowance shall be
reduced in accordance with the terms of Article II, F(1)(a) and (b) of the
Survivor Income Benefit Plan, but only to the extent that the reduction is
not taken into account in determining the Survivor Income Benefit Allowance
payable under the Survivor Income Benefit Plan.
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(2) No Survivor Income Benefit Equalization Allowance shall be
payable to a Plan Beneficiary to the extent attributable to benefits under
the Benefit Equalization Plan which are paid to the Deceased, Disabled or
Retired Employee other than in the form of a benefit equalization retirement
allowance (as defined in the Philip Morris Benefit Equalization Plan.
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ARTICLE III
FUNDS FROM WHICH ALLOWANCES ARE PAYABLE
The Company's obligations under this Plan shall not be funded. Payments
of Allowances shall be made out of the general funds of the Company.
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ARTICLE IV
THE COMMITTEE AND ITS DELEGATEES
The general administration of the Plan shall be vested in the Committee
and the Administrator.
All powers, rights, duties and responsibilities assigned to the Committee
and the Administrator under the Survivor Income Benefit Plan applicable to
this Plan shall be the powers, rights, duties and responsibilities of the
Committee and the Administrator under the terms of this Plan.
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ARTICLE V
AMENDMENT AND DISCONTINUANCE OF THE PLAN
The Board may, by resolution, from time to time, and at any time, amend
the Plan; provided, however, that authority to amend the Plan is delegated to
the following committees or individuals where approval of the Plan amendment
or amendments by the shareholders of Philip Morris Companies Inc. is not
required: (1) to the Committee, if the amendment (or amendments) will not
increase the annual costs of the Plan by $10,000,000, (2) to the Management
Committee, if the amendment (or amendments) will not increase the annual cost
of the Plan by $4,000,000, and (3) to the Administrator, if the amendment (or
amendments) will not increase the annual cost of the Plan by $500,000.
Any amendment to the Plan may effect a substantial change in the Plan,
and may include (but shall not be limited to) any change deemed by the Philip
Morris Companies Inc. to be necessary or desirable to obtain tax benefits
under any existing or future laws or rules or regulations thereunder;
provided, however, that no such amendment shall deprive any Plan Beneficiary
of the Survivor Income Benefit Equalization Allowance or other benefit
accrued to the time of such amendment.
The Plan may be discontinued at any time by the Board; provided, however,
that such discontinuance shall not deprive any Plan Beneficiary of his
Survivor Income Benefit Equalization Allowance or other benefit accrued to
the time of such discontinuance.
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ARTICLE VI
CHANGE IN CONTROL PROVISIONS
A. In the event of a Change of Control, each Plan Beneficiary shall, upon
the Change of Control, be entitled to a lump sum in cash, payable within 30
days of the Change of Control, equal to the actuarial equivalent of his
Survivor Income Benefit Equalization Allowance, determined using actuarial
assumptions no less favorable than those used under the Philip Morris
Salaried Employees' Retirement Plan immediately prior to the Change of
Control.
B. Definition of Change of Control.
'Change of Control' shall mean the happening of any of the following
events:
(1) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, and amended (the 'Exchange Act')) (a 'Person') of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of
common stock of Philip Morris Companies Inc. (the 'Outstanding Company
Common Stock') or (ii) the combined voting power of the then outstanding
voting securities of Philip Morris Companies Inc. entitled to vote
generally in the election of directors (the 'Outstanding Company Voting
Securities'); provided, however, that the following acquisitions shall
not constitute a Change of Control: (i) any acquisition directly from
Philip Morris Companies Inc., (ii) any acquisition by Philip Morris
Companies Inc., (iii) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by Philip Morris Companies Inc. or
any corporation controlled by Philip Morris Companies Inc. or (iv) any
acquisition by any corporation pursuant to a transaction described in
clauses (i), (ii) and (iii) of paragraph (3) of this Section B; or
(2) Individuals who, as of the date hereof, constitute the Board
(the 'Incumbent Board') cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the shareholders of Philip Morris Companies Inc., was
approved by a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as
a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board; or
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(3) Approval by the shareholders of Philip Morris Companies Inc. of
a reorganization, merger, share exchange or consolidation (a 'Business
Combination'), in each case, unless, following such Business Combination,
(i) all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more than
80% of, respectively, the then outstanding shares of common stock and the
combined voting power of the then outstanding voting securities entitled
to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns Philip Morris Companies Inc. through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately prior
to such Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (ii) no Person
(excluding any employee benefit plan (or related trust) of Philip Morris
Companies Inc. or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the
corporation resulting from such Business Combination or the combined
voting power of the then outstanding voting securities of such
corporation except to the extent that such ownership existed prior to the
business Combination and (iii) at least a majority of the members of
board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or
(4) Approval by the shareholders of Philip Morris Companies Inc. of
(i) a complete liquidation or dissolution of Philip Morris Companies Inc.
or (ii) the sale or other disposition of all or substantially all of the
assets of Philip Morris Companies Inc., other than to a corporation, with
respect to which following such sale or other disposition, (A) more than
80% of, respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding voting
securities of such corporation entitled to vote generally in the election
of directors is then beneficially owned, directly or indirectly, by all
or substantially all of the individuals and entities who where the
beneficial owners, respectively, of the Outstanding Company Common Stock
and Outstanding Company Voting Securities immediately prior to such sale
or other disposition in substantially the same proportion as their
ownership, immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be, (B) less than 20% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote
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generally in the election of directors is then beneficially owned,
directly or indirectly, by any Person (excluding any employee benefit
plan (or related trust) of Philip Morris Companies Inc. or such
corporation), except to the extent that such Person owned 20% or more of
the Outstanding Company Common Stock or Outstanding Company Voting
Securities prior to the sale or disposition and (C) at least a majority
of the members of the board of directors of such corporation were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such sale or
other disposition of assets of Philip Morris Companies Inc. or were
elected, appointed or nominated by the Board.
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